Political negotiation for the package of measures

The meeting between PM Antonis Samaras and the auditors on Monday afternoon lasted just 35 minutes. There was disagreement between the two sides and the effort to find a solution for the political negotiations was postponed for a later date. Thomsen reportedly said "the program does not pan out. We must confess this to the Eurogroup."

Samaras has already contacted Barroso, Rompuy and the EU leaders who have a positive attitude towards our country.

Finance minister Yiannis Stournaras said "there is consultation on the measures we have sent to them, they requested clarifications and the debate continues." The government merely leaked that "consultation is laborious and the prime minister has many contacts with European leaders."

The Troika representatives are questioning the measures of 2 billion euros and require almost the entire package to stem from cuts in wages, pensions and benefits. Late on Monday evening and after their withdrawal from Maximus Mansion, it was announced that all family allowances and tax free limits for each additional dependent child will be eliminated in 2013. Instead, the government is planning on issuing a bonus for every family with children (even with one or two children) to be paid directly by the tax authorities and not by OGA, the prefectures etc. The new system will provide a bonus like the one already issued to families with three children (about 500 per year per child).

TheTroika is asking for the full deregulation of the labour market and the regulated professions, as well as for the sale of prime public real estate, to proceed. The government appears determined to eliminate all tax breaks and establish the increase in retirement age to 67 years.

After the additional requirements by the Troika it is certain that there will be a new meeting of political leaders. Samaras informed Venizelos and Kouvelis by telephone. The Greek government wants to ensure a positive Troika report on the sustainability of the Greek debt, which is a precondition for the disbursement of the tranche of 31.5 billion euros, and are also requesting the extension of the fiscal adjustment program.

The PM wants to achieve the release of the tranche at the EU summit on October 18. An earlier agreement with the Troika and a positive response at the Eurogroup will serve as a guarantee that will allow him to carry the heavy package of measures in parliament and seek the vote of his MPs. The government fears that the Troika team are expressing new demands to delay negotiations and postpone any decision for the country for a later date. But if the decision is not made on Oct. 18, then it will be postponed for after the U.S. elections when the situation will be different and the more serious issues of Spain, Italy and the overall management of the debt crisis in the Eurozone will be on the table of discussions.

In the background lies the confrontation between the IMF and EU-Berlin about the overall sustainability of the Greek debt. To keep the program going, the IMF wants a new restructuring of the Greek debt that will make it sustainable and requires additional funding, which is rejected by the German government.